It’s astounding to think that wholesale gas and electricity prices have dropped by around 45% year over year, but these savings are not being passed onto energy customers.
In 2020, the energy market has seen the cost of power hit record lows. Customers who are on variable rate tariffs have not been able to make the most of this as their energy bills are more or less still the same. Wholesale energy prices have dropped by 46% compared to figures from 2019, wholesale costs make up 38% of a general dual-fuel bill, according to Ofgem, the energy industry regulator. A decrease this big should in theory lead to a 17.5% reduction in price on a customer’s bill if the savings were being passed on.
The average consumer should be seeing a saving of £16 per month or just under £200 per year if wholesale prices remain at this level.
Ofgem states that: standard variable tariffs should “go up and down in line with the market”. Data from Utility Saving Expert shows that the average price of a standard variable tariff from one of the ‘big six’ energy suppliers rose by 3% in 2020.
Private energy supplier, Bulb, who are based in London have not altered their prices since March, a time when gas prices saw a decrease while electricity prices saw an increase.
A spokesperson for the supplier said: "Bulb is committed to transparency and fairness whilst helping people lower their energy bills and carbon emissions. Wholesale gas and electricity prices are expected to remain low for the summer, but could rise again before the end of the year. The coronavirus crisis has made the wholesale market much harder to predict in the long term. In light of this uncertainty and an expected rise in network costs, we're not planning a change to our pricing."
Chris Richards, Managing Director of energy comparison site Utility Saving Expert, said that: “Consumers who switch to one of the best fixed rate deals from their current standard variable rate tariff could be saving more than £300 annually.” This is according to data taken from an average household in the UK.
“It’s surprising to me that a number of energy suppliers haven’t passed on these savings to their paying customers. Variable-rate tariffs should be used as intended. Firms are quick to increase their unit rates when wholesale energy prices rise, so why can’t they lower them when there is a decline?”, added Chris.
If you’re currently on a standard variable rate tariff and feel that your bill is more or less the same, now might be the best time to compare and switch energy suppliers and lock in a better deal.